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Monday 11 May, 2015

AerCap Holdings N.V.

AerCap Holdings N.V. Reports Financial Results for First Quarter 2015

AerCap Holdings N.V. Reports Financial Results for First Quarter 2015

Amsterdam, Netherlands; May 11, 2015

  • Adjusted net income of $304.6 million for the first quarter of 2015 (Reported net income of $311.5 million)
     
  • Adjusted basic earnings per share of $1.44 for the first quarter of 2015 (Reported basic earnings per share of $1.47)

Operational Update

  • 104 aircraft transactions executed including the purchase of 17 aircraft with a value of $1.3 billion.
  • Fleet utilization rate of 99.4%; 7.6 year average age of the owned fleet; and average remaining contracted lease term of 5.9 years.
  • Commitments to purchase 368 aircraft with scheduled delivery dates through 2022. Over 90% of committed aircraft purchases delivering through December 2017 and approximately 65% delivering through 2019 are placed, either under lease contract or letter of intent.
  • $7.2 billion of available liquidity. Since the announcement of the ILFC transaction in December 2013, $14.6 billion of financing has been raised.

Aengus Kelly, CEO of AerCap, commented: "AerCap reported another record quarter with over $300 million of adjusted net income. With 104 aircraft transactions executed, our first quarter results reflect the attractiveness of our aircraft portfolio, the diversity of our global customer base, and the resilience of the industry fundamentals of aircraft leasing. Further, throughout the quarter, we continued to access attractive capital as shown by our execution of $1.6 billion of capital markets initiatives. Finally, our deleveraging continues ahead of plan, ending the quarter with a debt/equity ratio of 3.2 to 1.

Going forward, we continue to see strong demand globally for our aircraft, as evidenced by the 99% utilization rate. Our platform executes an aircraft transaction every 24 hours and our order book remains one of the most attractive in the industry. The combination of our global platform, experienced management team along with the long dated nature of our lease cash flows and liability structure will drive attractive returns for our shareholders. To that end, we will continue to allocate capital to maximize long term shareholder value."

First Quarter 2015 Financial Results

  • Reported net income of $311.5 million, compared with $54.7 million for the same period in 2014. Reported basic earnings per share of $1.47, compared with $0.48 for the same period in 2014. Increases in reported net income and earnings per share over the first quarter 2014 driven primarily by the ILFC transaction.
  • Adjusted net income of $304.6 million, compared with $77.8 million for the same period in 2014. Adjusted basic earnings per share of $1.44, compared with $0.68 for the same period in 2014. Increases in adjusted net income and earnings per share over the first quarter 2014 driven primarily by the ILFC transaction.
  • Annualized net spread of 9.7%, up from 8.7% for the same period in 2014.
  • Debt/equity ratio of 3.2 to 1 as of March 31, 2015 compared to 2.5 to 1 as of March 31, 2014, reflecting our acquisition of ILFC.
  • Total assets of $44.1 billion as of March 31, 2015 compared to $43.9 billion as of December 31, 2014.

Net Income/Earnings Per Share

Set forth below are the details to reconcile reported net income to adjusted net income, including the specific adjustments.

  Three months ended
March 31,
  2015 2014 % increase/
(decrease)
  (US dollars in millions except share and per share amounts)
       
Net income   $ 311.5    $ 54.7   469%
       
Adjusted for:       
  Mark-to-market of interest rate caps and swaps, net of tax   6.6   4.3   53%
  Transaction and integration related expenses, net of tax   3.8   18.8   (80%)
  Maintenance rights related expenses, net of tax    (17.3)   -   NA
Adjusted net income $ 304.6  $ 77.8  292%
       
Adjusted earnings per share - basic $ 1.44   $ 0.68  110%

First quarter 2015 adjusted net income increased 292% over the same period in 2014 and first quarter 2015 adjusted earnings per share increased 110% over the same period in 2014. The increases were driven primarily by the ILFC transaction.

Adjusted net income reflects expensing the maintenance rights asset over the remaining economic life of the aircraft as compared to expensing this asset during the remaining lease term as reflected in reported net income.  The maintenance rights asset represents the difference between the actual physical condition of the aircraft at the ILFC acquisition date and the value based on the contractual return conditions in the lease contracts. We believe this measure may further assist investors in their understanding of our operational and financial performance. The difference in the two methods will have no economic impact as it is non-cash and equalizes over time.

Revenue and Net Spread

  Three months ended
March 31,
  2015 2014 % increase/
(decrease)
  (US dollars in millions)
       
Lease revenue:       
  Basic lease rents    $ 1,157.9    $ 234.9   393%
  Maintenance rents and other receipts   71.2   14.2   401%
Lease revenue   1,229.1   249.1   393%
Net gain on sale of assets   33.7   9.8   244%
Other income   29.4   5.9   398%
Total revenues and other income    $ 1,292.2   $ 264.8  388%

Basic lease rents were $1,157.9 million for the first quarter of 2015, compared with $234.9 million for the same period in 2014. The increase was driven primarily by the ILFC transaction and new aircraft purchases. Our average lease assets for the first quarter 2015 were $36.4 billion, compared with $8.1 billion for the same period in 2014.

Lease revenue for the first quarter of 2015 was $1,229.1 million, compared with $249.1 million for the same period in 2014.

Net gain on sale of assets for the first quarter of 2015 was $33.7 million relating to 12 aircraft that were sold and 5 aircraft that were reclassified to finance leases, compared with $9.8 million for the same period in 2014.

Other income for the first quarter of 2015 was $29.4 million, compared with $5.9 million for the same period in 2014. The increase was driven by the ILFC acquisition and related primarily to income from our AeroTurbine subsidiary.

  Three months ended
March 31,
  2015 2014 % increase/
(decrease)
  (US dollars in millions)
       
Basic lease rents  $ 1,157.9   $ 234.9  393%
       
Interest expense   287.6   63.0   357%
Adjusted for:       
  Mark-to-market of interest rate caps and swaps    (7.6)    (4.9)   54%
Adjusted interest expense   280.0   58.1   382%
       
Net interest margin, or net spread  $ 877.9   $ 176.8  396%

As shown in the table above, adjusted interest expense was $280.0 million in the first quarter of 2015, a 382% increase compared with the same period in 2014. Net spread was $877.9 million in the first quarter of 2015, a 396% increase compared with the same period in 2014.

Selling, General and Administrative Expenses

  Three months ended
March 31,
  2015 2014 % increase/
(decrease)
  (US dollars in millions)
       
Share-based compensation expenses   24.8   2.4   933%
Other selling, general and administrative expenses   70.3   20.7   240%
Total selling, general and administrative expenses    $ 95.1   $ 23.1  312%

The increase in selling, general, and administrative expenses, period over period, reflects the ILFC acquisition.

Effective Tax Rate

AerCap's blended effective tax rate during the first quarter of 2015 was 13.5%. The blended effective tax rate for the year ended December 31, 2014 was 15.0%. The blended effective tax rate in any year is impacted by the source and amount of earnings among AerCap's different tax jurisdictions.

Financial Position

  March 31,
2015
 December 31,
2014
 % increase/
(decrease) over
December 31,
2014
  (US dollars in millions except d/e ratio)
       
Total cash (incl. restricted)    $ 1,928.0    $ 2,207.8   (13%)
Flight equipment held for operating leases, net   32,626.8   31,984.7   2%
Total assets   44,083.8   43,867.4   0%
Debt   30,256.6   30,402.4   (0%)
Total liabilities   35,815.1   35,924.8   (0%)
Total equity   8,268.6   7,942.5   4%
         
Adjusted debt/equity ratio   3.2     3.4   (6%)

As of March 31, 2015, AerCap's portfolio consisted of 1,642 aircraft that were owned, on order, under contract or managed (including aircraft owned by AerDragon, a non-consolidated joint venture). The average age of the owned fleet as of March 31, 2015 was 7.6 years and the average remaining contracted lease term was 5.9 years.

Notes Regarding Financial Information Presented In This Press Release

The financial information presented in this press release is not audited.

The following is a definition of non-GAAP measures used in this press release and a reconciliation of each such measure to the most closely related GAAP measure. We believe these measures may further assist investors in their understanding of our operational performance.

Adjusted net income and adjusted earnings per share. These measures are determined by adding non-cash charges relating to gains and losses created by a mark-to-market of our interest rate caps and swaps, an adjustment for maintenance rights related expense, and transaction and integration related expenses, in each case during the applicable period and net of tax, to GAAP net income. The average number of shares is based on a daily average.

We use interest rate caps and swaps to allow us to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on our floating rate debt. Management determines the appropriate level of caps in any period with reference to the mix of floating and fixed cash flows from our lease, debt and other contracts. We do not apply hedge accounting to our interest rate caps and some of our swaps. As a result, we recognize the change in fair value of these interest rate caps and swaps in our income statement during each period.

In connection with the ILFC transaction, we have recognized maintenance rights assets relating to the existing leases on the legacy ILFC aircraft. The adjustment for maintenance rights related expense is based on the difference between expensing the maintenance rights asset during the remaining lease term as described below as compared to expensing this asset straight-line over the remaining economic life of the aircraft. For those contracts that pay maintenance deposit rents during the lease term, the maintenance rights asset is expensed at the time the lessee provides us with evidence that a qualifying maintenance event related to pre-acquisition usage has been completed. For those contracts that have an end-of-lease compensation requirement relating to the maintenance condition of the aircraft, the maintenance rights asset is expensed upon lease termination to the extent the lease end cash compensation paid to us is less than the maintenance right asset.

In addition, adjusted net income excludes the following non-recurring charges:

  • First quarter 2015 adjusted net income of $304.6 million excludes expenses relating to the ILFC transaction and integration of $3.8 million, net of tax.
     
  • First quarter 2014 adjusted net income of $77.8 million excludes expenses relating to the ILFC transaction and integration of $18.8 million, net of tax.

In addition to GAAP net income and earnings per share, we believe these measures may further assist investors in their understanding of our operational performance in relation to past and future reporting periods. A reconciliation of adjusted net income to net income for the three month periods ended March 31, 2015 and 2014 is presented in a table under the Net Income/Earnings Per Share section of this press release.

Net interest margin, or net spread (refer to second table under Revenue and Net Spread section of this press release). This measure is the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps. We believe this measure may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. This measure reflects the impact from changes in the number of aircraft leased, lease rates, utilization rates, as well as the impact from changes in the amount of debt and interest rates.

Debt/equity ratio. This measure is the ratio obtained by dividing adjusted net debt by adjusted shareholders' equity. Adjusted net debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to $1.0 billion of subordinated debt. Adjusted shareholders' equity means total shareholders' equity, plus the 50% equity credit. Adjusted net debt and adjusted shareholders' equity are adjusted by the 50% equity credit to reflect the equity nature of that financing arrangement and to provide information in line with definitions under certain of our debt covenants.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Monday, May 11, 2015, at 9:00 am Eastern Time. The call can be accessed live by dialing (U.S./Canada) +1-212 444 0481 or (International) +31-20-716-8256 and referencing code 5739118 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations".

In addition, an Investor & Analyst Meeting will be hosted by AerCap's management today, Monday, May 11, 2015, at 11:30 am Eastern Time at The New York Palace Hotel (Drawing room), 455 Madison Avenue, New York. Doors will open at 11:00 am.

A webcast replay of the earnings conference call will be archived in the "Investor Relations" section of the Company's website for one year.

To participate in either event, please register by emailing: [email protected]

For further information, contact John Wikoff: +31-6-3169-9430 ([email protected]) or Mark Walter and Jenny Payne (Instinctif Partners): +44-20-7457-2020 ([email protected]).

About AerCap Holdings N.V.

AerCap is the global leader in aircraft leasing with approximately 1,640 owned, managed or on order aircraft in its portfolio. AerCap has one of the most attractive order books in the industry. AerCap serves over 200 customers in approximately 90 countries with comprehensive fleet solutions and provides part-out and engine leasing services through its subsidiary, AeroTurbine. AerCap is listed on the New York Stock Exchange (AER) and has its headquarters in Amsterdam with offices in Dublin, Los Angeles, Shannon, Fort Lauderdale, Miami, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

Forward Looking Statements

This press release contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are "forward-looking statements". In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as "may," "might," "should," "expect," "plan," "intend," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this press release are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. As a result, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. We do not undertake any obligation to, and will not, update any forward-looking statements, whether as a result of new information, future events or otherwise.

For more information regarding AerCap and to be added to our email distribution list, please visit http://www.aercap.com.

Financial Statements Follow

The results of ILFC have been consolidated in AerCap Holdings N.V.'s financial statements as of May 14, 2014, the completion date of the acquisition.

AerCap Holdings N.V.     
Unaudited Consolidated Balance Sheets     
(In thousands of U.S. Dollars)      
      
 March 31, 2015 December 31, 2014  
      
Assets     
Cash and cash equivalents  $ 1,594,018    $ 1,490,369  
Restricted cash 333,985   717,388  
Trade receivables 150,620   160,412  
Flight equipment held for operating leases, net 32,626,760   31,984,668  
Maintenance rights intangible and lease premium, net 3,799,296   3,906,026  
Flight equipment held for sale 80,593   14,082  
Net investment in finance and sales-type leases 414,117   347,091  
Prepayments on flight equipment 3,368,191   3,486,514  
Other intangibles, net 519,807   523,709  
Deferred income tax assets 150,932   190,029  
Other assets 1,045,431   1,047,092  
Total Assets $ 44,083,750   $ 43,867,380  
      
      
Liabilities and Equity     
Accounts payable, accrued expenses and other liabilities  $ 1,202,240    $ 1,195,880  
Accrued maintenance liability 3,213,220   3,194,365  
Lessee deposit liability 854,247   848,332  
Debt 30,256,631   30,402,392  
Deferred income tax liabilities 288,773   283,863  
Total liabilities 35,815,111   35,924,832  
      
Ordinary share capital €0.01 par value (350,000,000 ordinary shares authorized,      
 212,553,419 ordinary shares issued and outstanding at March 31, 2015 and      
 212,318,291 ordinary shares issued at December 31, 2014) 2,562   2,559  
Additional paid-in capital 5,574,266   5,557,627  
Accumulated other comprehensive loss  (6,726)    (6,895)  
Accumulated retained earnings 2,621,981   2,310,486  
Total AerCap Holdings N.V. shareholders' equity 8,192,083   7,863,777  
Non-controlling interest 76,556   78,771  
Total Equity 8,268,639   7,942,548  
      
Total Liabilities and Equity $ 44,083,750   $ 43,867,380  
      
     

      
AerCap Holdings N.V.    
Unaudited Consolidated Income Statements    
(In thousands of U.S. Dollars, except share and per share data)     
     
 Three months ended March 31, 
 2015 2014 
     
Revenues and other income     
Lease revenue  $ 1,229,095    $ 249,061  
Net gain on sale of assets 33,701   9,806  
Other income 29,376   5,967  
Total Revenues and other income1,292,172  264,834  
     
Expenses     
Depreciation and amortization 452,229   89,785  
Asset impairment 4,696   -  
Interest expense 287,605   63,005  
Leasing expenses 92,685   12,783  
Transaction and integration related expenses 4,385   21,478  
Selling, general and administrative expenses 95,080   23,131  
Total Expenses936,680  210,182  
     
Income from continuing operations before income taxes and income    
 of investments accounted for under the equity method355,492  54,652  
      
Provision for income taxes  (47,990)    (4,647)  
Equity in net earnings of investments accounted for under the equity method 1,868   3,698  
      
Net income309,370  53,703  
     
Net loss attributable to non-controlling interest 2,125   1,008  
     
Net income attributable to AerCap Holdings N.V $ 311,495   $ 54,711  
     
Total basic earnings per share  $ 1.47    $ 0.48  
Total diluted earnings per share  $ 1.45    $ 0.47  
     
Weighted average shares outstanding - basic 212,119,050   113,644,703  
Weighted average shares outstanding - diluted 214,823,708   116,213,907  
         

           
AerCap Holdings N.V.     
Unaudited Consolidated Statements of Cash Flows     
(In thousands of U.S. Dollars)       
       
  Three months ended March 31,  
  2015 2014  
       
Net income    $ 309,370    $ 53,703  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   452,229   89,785  
Asset impairment   4,696   -  
Amortization of debt issuance costs and debt discount   11,188   20,403  
Amortization of lease premium intangibles   6,263   1,608  
Amortization of fair value adjustment on debt    (122,455)   -  
Accretion of fair value adjustment on deposits and maintenance liabilities   21,920   -  
Maintenance rights expense   57,751   -  
Net gain on sale of assets    (33,701)    (9,806)  
Deferred income taxes   44,007   25  
Other   22,632   4,151  
 Changes in operating assets and liabilities:       
  Trade receivables   9,792    (4,021)  
  Other assets   12,200   2,153  
  Accounts payable, accrued expenses and other liabilities    (45,545)    (3,023)  
Net cash provided by operating activities  750,347  154,978  
         
Purchase of flight equipment    (1,044,294)    (164,584)  
Proceeds from sale or disposal of assets   112,829   91,500  
Prepayments on flight equipment    (108,661)    (26,513)  
Collections of finance and sales-type leases   25,962   720  
Movement in restricted cash   383,403   5,794  
Net cash used in investing activities   (630,761)  (93,083)  
         
Issuance of debt   413,569   193,003  
Repayment of debt    (431,612)    (223,260)  
Debt issuance costs paid    (4,920)    (27,003)  
Maintenance payments received   136,971   29,849  
Maintenance payments returned    (126,484)    (6,076)  
Security deposits received   44,738   1,566  
Security deposits returned    (45,676)    (5,111)  
Net cash used in financing activities   (13,414)  (37,032)  
         
Net increase in cash and cash equivalents   106,172   24,863  
Effect of exchange rate changes on cash and cash equivalents    (2,523)    (241)  
Cash and cash equivalents at beginning of period   1,490,369   295,514  
Cash and cash equivalents at end of period   $ 1,594,018   $ 320,136  
           

For Investors:
Keith Helming
Chief Financial Officer
+31 20 655 9670
[email protected]

John Wikoff
Investor Relations
+31 6 3169 9430
[email protected]

For Media:
Frauke Oberdieck
Corporate Communications
+31 20 655 9616
[email protected]





This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: AerCap Holdings N.V. via Globenewswire

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